• The word ‘strategy’, deriving from the

Greek noun strategus, meaning

‘commander in chief’, was first used in the
English language in 1656.
• it is composed of stratos (army) and agein
(to lead)
• it is composed of stratos (army) and agein
(to lead)
• Wheelen and Hunger (1995, p. 3) define
strategic management as ‘that set
• of managerial decisions and actions that
determines the long-run performance of a
• corporation’.
• strategic
• management process is typically broken
down into five steps:
1. mission and goals
2. environmental analysis
3. strategic formulation
4. strategy implementation
5. strategy evaluation.
 Step – 1 Mission & Goals
• senior managers evaluating their position in
relation to the organization’s current mission and
goals.
• mission describes the organization’s values and
aspirations
• Goals are the desired ends sought through the
actual operating procedures of the organization
• and typically describe short-term measurable
outcomes
 Step – 2 Environmental Analysis
• internal organizational strengths and
weaknesses.
• external environment for opportunities and
threats.
• strategic factors are summarized by the
acronym SWOT – Strengths,
Weaknesses, Opportunities and Threats.
Step – 3 Strategic Formulation
• involves senior managers evaluating the
interaction between strategic factors and
making strategic choices that guide
managers to meet the organization’s
goals.
• Some strategies are formulated at the
corporate, business and specific functional
levels.
 Step – 4 Strategic Implementation
• is an area of activity that focuses on the
techniques used by managers to
implement their strategies.
• it refers to activities that deal with
leadership style, the structure of the
organization, the information and control
systems, and the management of human
resources
 Step – 5 Strategic Evaluation
• is an activity that determines to what
extent the actual change and performance
match the desired change and
performance.
 Hierarchy of strategy
1. corporate
2. business
3. functional.
 Corporate-level strategy
• describes a corporation’s overall direction in
terms of its general philosophy towards the
growth and the management of its various
business units.
• determine the types of business a corporation
wants to be involved in and what business units
should be acquired, modified or sold.
• addresses the question, ‘What business are we
in?
 Business-level strategy
• deals with decisions and actions pertaining
to each business unit.
• the main objective of a business-level
strategy being to make the unit more
competitive in its marketplace.
• addresses the question, ‘How do we
compete?
• Porter (1980, 1985) made a significant
contribution to our understanding of
business strategy by formulating a
framework that described three
competitive strategies:
• cost leadership
• differentiation and
• focus.
 Cost – leadership

• low-cost leadership strategy attempts to

increase the organization’s market share
by having the lowest unit cost and price
compared with competitors.
 Differentiation Strategy
• This assumes that managers distinguish
their services and products from those of
their competitors in the same industry by
providing distinctive levels of service,
product or high quality such that the
customer is prepared to pay a premium
price.
 Focus Strategy
• With the focus strategy, managers focus
on a specific buyer group or regional
market.
• A market strategy can be narrow or broad,
as in the notion of niche markets being
very narrow or focused.
• firm to choose from four generic business-
level strategies – low-cost leadership,
differentiation, focused differentiation and
focused low-cost leadership – in order to
establish and exploit a competitive
advantage within a particular competitive
scope
 modes of strategic orientation
• Miles and Snow (1984) have identified four
modes of strategic orientation:
defenders, prospectors, analysers and
reactors.
 Defenders
• are companies with a limited product line
and a management focus on improving the
efficiency of their existing operations.
• Commitment to this cost orientation makes
senior managers unlikely to explore new
areas.
 Prospectors
• are companies with fairly broad product
lines that focus on product innovation and
market opportunities.
• This sales orientation makes senior
managers emphasize ‘creativity over
efficiency’.
 Analyzers
• are companies that operate in at least two
different product market areas, one stable
and one variable.
• In this situation, senior managers
emphasize efficiency in the stable areas
and innovation in the variable areas.
 Reactors
• are companies that lack a consistent
strategy–structure–culture relationship.
• In this reactive orientation, senior
management’s responses to
environmental changes and pressures
thus tend to be piecemeal strategic
adjustments.
• Competing companies within a single
industry can choose any one of these four
types of strategy and adopt a
corresponding combination of structure,
culture and processes consistent with that
strategy in response to the environment.
• The different competitive strategies
influence the ‘downstream’ functional
strategies.
 Functional-level strategy
• Functional-level strategy pertains to the major
functional operations within the business unit,
including research and development, marketing,
manufacturing, finance and HR.
• This strategy level is typically primarily
concerned with maximizing resource productivity
• Addresses the question, How do we support the
business-level competitive strategy?
• Consistent with this, at the functional level, HRM
policies and practices support the business
strategy goals.
• three levels of strategy – corporate,
business and functional – form a hierarchy
of strategy within large multidivisional
corporations.
• In different corporations, the specific
operation of the hierarchy of strategy
might vary between ‘top-down’ and
‘bottom-up’ strategic planning.
 Top-Down Approach
• It resembles a ‘cascade’ in which the
‘downstream’ strategic decisions are
dependent on higher ‘upstream’ strategic
decisions
 Bottom-up Approach
• The bottom-up approach to strategy
making recognizes that individuals ‘deep’
within the organization might contribute to
strategic planning.
• Strategic management literature emphasizes
that the strategies at different levels must be
fully integrated.
• Thus:
• strategies at different levels need to inter-relate.
The strategy at corporate level must build upon
the strategies at the lower levels in the
hierarchy. However, at the same time, all parts
of the business have to work to accommodate
the overriding corporate goals.
• (F.A. Maljers, Chairman of the Board of Unilever,
quoted by Wheelen & Hunger,1995, p. 20)
• The need to integrate business strategy
and HRM strategy has received much
attention from the HR academic
community, and it is to this discourse that
we now turn.
SHRM? An Outcome or A Process
• For Snell et al., (1996, p. 1996) ‘strategic HRM’
is an outcome: ‘as organizational systems
designed to achieve sustainable competitive
advantage through people’.
• SHRM is also viewed as a process, ‘the process
of linking HR practices to business strategy’
(Ulrich, 1997)
• Bamberger and Meshoulam (2000) describe
SHRM as ‘the process by which organizations
seek to link the human, social, and intellectual
capital of their members to the strategic needs of
the firm’.
 HR strategy?

• According to Ulrich (1997) ‘HR strategy’ is

the outcome: ‘the mission, vision and
priorities of the HR function’.
• Bamberger and Meshoulam (2000)
conceptualize HR strategy as an outcome:
‘the pattern of decisions regarding the
policies and practices associated with the
HR system’
‘Espoused’ HR strategy &
‘Emergent’ HR strategy.
• Espoused HR strategy refers to the
pattern of HR-related decisions made but
not necessarily implemented.
• is the road map …
• Emergent HR strategy refers to the pattern
of HR-related decisions that have been
applied in the workplace.
• is the road actually traveled….
(Bamberger & Meshoulam, 2000)
 SHRM
• Let us begin the discussion of SHRM and
HR strategy with a focus on the link
between organizational strategy
formulation and strategic HR formulation.
 Business – HRM link
• Business – HRM links has been classified
in terms of
• proactive-reactive continuum and
• in terms of environment–human resource
strategy–business strategy linkages
(Bamberger & Phillips, 1991)
 Proactive orientation
• In the ‘proactive’ orientation, the HR
professional has a seat at the strategic
table and is actively engaged in strategy
formulation.
• In Figure 2.3 above, the two-way arrows
on the right-hand side showing both
downward and upward influence on
strategy depict this type of proactive
model.
 Reactive orientation
• In the ‘reactive’ orientation, which sees the HR
function as being fully subservient to corporate
and business-level strategy, and organizational-
level strategies as ultimately determining HR
policies and practices.
• Once the business strategy has been
determined, an HR strategy is implemented to
support the chosen competitive strategy. This
type of reactive orientation would be depicted in
Figure 2.3 above by a one-way downward arrow
from business- to functional-level strategy.
• In this way HR strategy is concerned with
the challenge of matching the philosophy,
policies, programmes, practices and
processes – the ‘five Ps’
• – in a way that will stimulate and reinforce
the different employee role behaviours
appropriate for each competitive strategy
(Schuler, 1989, 1992).
• Bamberger and Phillips’ (1991) model
depicts links between three poles: the
environment,
• human resource strategy and the business
strategy (Figure 2.5).